China Property Bubble Bursting?

Well, we’ve heard rumors of it, perhaps it’s now time…

From The Financial Times:

Last updated: November 21, 2011 7:32 pm
China property sale falls could hit banks

By Simon Rabinovitch in Beijing

The number of property transactions in China’s largest cities has fallen to dangerously low levels, according to regulatory documents obtained by the Financial Times.

According to the documents, the China Banking Regulatory Commission earlier this year ordered domestic banks to weigh the impact of a 30 per cent decline in housing transactions in “stress tests” aimed at determining the health of the Chinese financial system.

OK, so they were worried that a major stress of 30% slowdown would make some banks fail.

In April the CBRC told banks to test their loan books against a 50 per cent fall in prices, and also a 30 per cent fall in transaction volumes.

In October, however, property transactions fell 39 per cent year-on-year in China’s 15 biggest cities , according to government data. Nationwide, transactions dropped 11.6 per cent, accelerating from a 7 per cent fall in September.

And they are getting 39% in the biggest cities. Wonder how much prices have dropped? And with them bank collateral…

The rest of the article is well written and worth a read. They describe some of the ‘oddities’ of Chinese banking and loans, and how this kind of slowdown could easily lead to problems. Potentially very large problems. They also explore the collateral issue.

The fear is that the impact of a bursting of the Chinese property bubble could yield a crisis just as dramatic as the one now unfolding in Europe.

Yes, that’s a ‘tease’ – the rest of it is in the article. Still, ~”as dramatic as Europe” is a bit of an issue…

Somehow I don’t think we’ve heard the last of this…

The article goes on to speculate about nock-on effects in steel, cement, and other markets. I’d add that out of work construction and cement workers will not be buying as many western goods nor eating lunch at KFC quite as often. Folks hanging their hopes on ‘China growth’ will likely get a lump of coal for Christmas as the ripples reach the edge of the pond.

Revision

OK, I tried to “Do the right thing” and just post some ‘excerpts’ as a tease with a link to the whole article for others to read. But the F.T. looks to have gotten ‘too cute’ with their attempts at I.P. buggery. Using the link to the original page gives a nag to sign up and then dumps you into the latest story (not the one in question) if you refuse. Using the link they embed in any ‘cut / paste’ does the same. Both here:

http://www.ft.com/intl/cms/s/0/e608bf90-13ed-11e1-9562-00144feabdc0.html#axzz1eNRNZeLM

http://www.ft.com/cms/s/0/e608bf90-13ed-11e1-9562-00144feabdc0.html#ixzz1eNrH0VUX

As I’m now unable to point you to the actual article by any reasonable means, I can’t do the ‘quote a tease and point to the original’ and find myself forced into quoting more of the article than I’d like just to document that I’m not making stuff up. As an educational use in a non-profit operation, this comes under US “Fair Use” doctrine (though I’d have rather done the more polite ‘tease and link’). With that said, a tour of the article in question. (If I can figure out how to get an actual link TO that article, I’ll take down some of this text. But as of now it looks like F.T. is being “too cute by 1/2″…)

When you do a copy / paste of any significant block of text, they give this “nag” added to the cut:

High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/e608bf90-13ed-11e1-9562-00144feabdc0.html#ixzz1eNrH0VUX

And I tried to honor that with using their link. But that gives a ‘log in to get content’ pop-up and if you don’t log in it dumps you into some other page. (Don’t know what it does if you DO “sign up”…)

So, the article:

According to the documents, the China Banking Regulatory Commission earlier this year ordered domestic banks to weigh the impact of a 30 per cent decline in housing transactions in “stress tests” aimed at determining the health of the Chinese financial system.

While the government has been trying to rein in sky-high property prices, a Chinese real estate slump would have a significant ripple effect on the global economy. Property construction accounted for more than 13 per cent of China’s economy last year.

In April the CBRC told banks to test their loan books against a 50 per cent fall in prices, and also a 30 per cent fall in transaction volumes.

In October, however, property transactions fell 39 per cent year-on-year in China’s 15 biggest cities , according to government data. Nationwide, transactions dropped 11.6 per cent, accelerating from a 7 per cent fall in September.

The fall-off in transactions has affected developers’ cash flows and, in some cases, their ability to repay bank loans. Rising defaults after a lending surge in 2009 and 2010, much of which ended up in the property sector, were cited by the International Monetary Fund this month as one of the Chinese financial sector’s biggest risks.

The CBRC has not released the results and declined to comment. But one analyst who reviewed the stress-test documents said they did not take into account the impact that fewer transactions and lower property prices would have on bank collateral.

“If developers can’t sell property and local governments can’t sell land, it’s hard to see why banks would be any better at either task under such conditions,” the analyst said.

Chinese regulatory officials admit privately that the tests need to be improved. One senior official said banks were often unaware that loans to big state-owned enterprises had been funnelled to real estate subsidiaries, and acknowledged that the impact on collateral had not been fully taken into account.

The weaknesses in the Chinese scenarios echo earlier problems with stress testing in the European Union, where regulators underestimated the potential impact of a sovereign debt crisis.

The fear is that the impact of a bursting of the Chinese property bubble could yield a crisis just as dramatic as the one now unfolding in Europe. Rising defaults after a lending surge in 2009 and 2010, much of which ended up in the property sector, were flagged by the International Monetary Fund this month as one of the major risks hanging over the Chinese financial sector.

While Beijing’s campaign to cool the property market has had its intended effect, some analysts worry that the government has underestimated the impact its measures are having.

The measures, including higher downpayments and restrictions on home purchases, have taken nearly two years to gain traction.

But the concern is that the government will have trouble shifting gears quickly to respond if necessary. The fall in the number of in buyers is also beginning to weigh on construction, which could deal a blow to the wider economy.

Those knock-on effects were barely tested in the stress analysis. Banks were told to catalogue a series of property-related loans: to developers, for mortgages and to upstream industries like cement and downstream industries like furnishings. But the methodology imagines that while house prices drop, overall economic growth remains more or less unimpaired.

“Before property prices drop 30 per cent, one needs to think how much sales are down and, more importantly, how much construction is down. Not only will that impact on steel and cement, but it also would mean a drop in industrial production, investment and jobs,” one analyst told the FT.

Another analyst said the stress tests did not do a good job of grappling with the way a property slump would ripple through the banking system by resulting in falling land sales and prices on the value of bank collateral. Yet the vast majority of collateral in the Chinese banking system is land or property, so a slump could force writedowns across the board.

“This is the key correlation risk. If developers can’t sell property and local governments can’t sell land, it’s hard to see why banks would be any better at either task under such conditions,” the analyst said.

As you can see, my original “tease and link” intent would have left a lot of reason to read their site. Now I’m mostly just thinking I need to find sources other than F.T. and leave them in the dark, link wise…

Sigh. I wish folks would realize that some of us would like to help them make money, if they were not so stingy and greedy about things.

About E.M.Smith

A technical managerial sort interested in things from Stonehenge to computer science. My present "hot buttons' are the mythology of Climate Change and ancient metrology; but things change...
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48 Responses to China Property Bubble Bursting?

  1. sandy mcclintock says:

    This is a bit of a worry !
    I used too wonder why there was so many empty apartments in China (Some say whole cities are empty). I think I have figured out the reason; the bank investment interest rate has been below the inflation rate, so savers hope that the value of a tangible asset like property is more likely to keep up with inflation.
    I suppose if deflation comes next then the bank investment interest rate becomes more attractive again and housing becomes less attractive.

  2. Nick says:

    They have done the same as the West. Built an economy based on debt, and also the assumptions that the consumers (the west) would carry on buying on credit and getting into debt.

    The second bit is out of the window.

    That then stresses their borrow and build property boom, and as it says, it will take the Chinese banks out.

    That it will take state organisations profiteering and rent seeking out, well that just funny.

  3. Nick says:

    I would hasten to add, perfectly predictable

  4. E.M.Smith says:

    @Nick:

    While the individual properties may well be leveraged via loans, China is a massive trade surplus nation. This makes a very big difference. While our system has rot at its core from excess net debt, China is strong at the core and if some property lenders go under, the economy is net still a winner.

  5. H.R. says:

    My daughter-in-law bought her mom an apartment in China about 5-6 years ago in Shenzhen. Mom took out the mortgage with the Chinese bank but the kids made the downpayment and are making the periodic payments. It’s waaay cheap by US standards; well under $200 USD/month. OTOH, what’s pocket change for a young US couple with two good salaries and no children may be seriously out of reach for the vast majority of Chinese workers. I’ll try to remember to ask my daughter-in-law what the word (and worries) on the street are over there at the moment.

  6. BobthebuilderIcanfixit says:

  7. John F. Hultquist says:

    sandy mcclintock (23:32:52) :

    “. . . many empty apartments in China (Some say whole cities are empty).”

    Sometime in the past year the WSJ did an article on this. As you mention, the idea has been that housing was an investment and not intended as a place to live in. Somewhat like purchasing gold that is stored for you by a bank or whatever. You never actually take posession. Also, like Las Vegas and house flippers – just don’t get caught with such assets when prices fall. There’s a phrase: “Never try to catch a falling knife.” Same idea. With the USA housing mess, just move aside and let the bank reposess. They are backed up by Fannie Mae – Oh, wait. That’s us.

  8. George says:

    I started reading about this a couple of months ago. In the “ghost cities” people were looking at apartments and they were often over USD 1,000,000 (that’s right, a million dollars for a 3br apartment). Then a couple of months ago I started reading stories where these prices had been cut in half, I think I might have posted that here. The owners who had purchased at the old price are livid and have seen their investment destroyed.

    But Chinese don’t go for the long term mortgages like we do. These sales are cash. So while they don’t have the underwater mortgage problem, they have a problem where individuals have lost a good bit of their life savings.

  9. Nick says:

    While the individual properties may well be leveraged via loans, China is a massive trade surplus nation.

    ============

    And do you think companies are not leveraged?

    Are the companies interlinked? ie Supply chain.

    What happens when the surplus is shut off. eg. EU and US depression.

    The are more interconnected than people realise.

    All these factories, built on credit or out of organic growth?

  10. mfosdb says:

    This might work:
    Copy the link to the FT article
    Insert the link into the Google search box.
    First item is the FT article

    Ridiculous way to get traffic, but it worked for me…

  11. H.R. says:

    @George
    Not a contradiction to your cash sales point, but I think the term on that mortgage for mom was ten (or less?) years. There are two parts to a property bust; developers and end buyers. I’ll ask further about what’s going on from the viepoint of the person with boots on the ground and report back. It will be a few days.

  12. tckev says:

    IMHO Ken Rapoza at Forbes does a reasonable job at reporting on the BRIC countries.
    His take on China’s housing bubble is here…

    http://www.forbes.com/sites/kenrapoza/2011/11/08/chinas-housing-bubble-past-and-its-future/

  13. Pascvaks says:

    One of the greatest (alledged) advantages that Americans have had in business, war, and whatnot, is something called “Unpredictability”. To hear German Generals after WWII talk, it was the one thing that made all the difference between winning and not for them when engaged against Yanks. They just couldn’t guess what dumb or bright thing the Americans were going to do next.

    I’m quite sure that the Chinese are getting a very, very, very small feeling about this too. But thank you know who and Greyhound, at the moment, OBJuan is very predictable; and American bankers and capitalists (people with over a $100 Billion to toss hither and yonder) are very few and far between, and very busy sitting on top of their money.

    Why is OB so predictable?
    He hasn’t a clew about what to do, and he doesn’t give a flying fig about it. He thinks he’s God’s Gift to All Mankind; the smartest person in the world; the best looking; and the greatest golfer ever. He’s bent on his kind’a, sort’a “Marxist Revolution” Campaign and can’t be swayed. With a single mind to reelection and coronation as Presidente-For-Life he’s thrown everything to the wind and nothing is going to happen to the American economy for at least the next full year and a half. If he wins next year, the Chinese figure it’s only going to be to their benefit to pick up a lot of IOU’s now. If he doesn’t win, all those IOU’s will still be worth at least 50% on the dollar because all Americans think they’re supposed to “Fight Fair”. American’s bent on self-destruction are the best future China could hope for, and OB is their Dudly Do-Right and Bullwinkle J. Moose all roled into one. He’s the Most predictable person on the planet.

    There’s just one fly bussing around. If OB isn’t really crazy, if somehow he’s cornered by his wife or one of his daughters and told he’s really screwing things up bigtime, then there’s going to be BIG problems. But what’s the chance that would ever happen? Every climate model says, “OB WON”T CHANGE”. Now you have to have faith in something, right?

  14. P.G. Sharrow says:

    Have no fear. The great deceiver will be replaced by a “Wise old Man” that will set things right and set mankind back on the right path. The philosophy of “More” will be discredited and this Obamanation will be ended. The fat times of “Giverment” largess will come to an end and there will be an extended period of reduced economic activity but freedom will be greatly improved. Freedom to succeed or fail as government, by Central Control, will be greatly reduced. pg

  15. E.M.Smith says:

    @Pascvaks:

    You see that “unpredictability” in the Battle of Midway, too. Sent loads of stuff at the Japanese carriers that did diddly squat, until we found what worked. Sunk 4, hollowed out the Japanese Pacific Fleet, and they were playing defense from then on out.

    In one of the Pacific battles we had bombers B-17 IIRC, bombing ships and hitting nothing, but it scattered the ships and added to their disorganization so much that they had trouble figuring out what to do, then our dive bombers arrived and sank them… Ah, found a link with the correct stuff in it (rather than the apocryphal B-17 sinks ships…)

    http://www.angelfire.com/fm/odyssey/2-b17.htm

    The first great success attributed to the B-17 was the sinking of the Japanese battleship Haruna off Luzon during the invasion of the Philippines, by a Fortress piloted by Colin Kelly, who thereby became one of the first American popular heroes of World War Two. Although Haruna had in fact not even been hit, the story created a deep impression which was never fully corrected.

    Similarly, in June 1942 when US carrier aircraft (with assistance from US submarines) inflicted a crushing defeat on the Japanese Navy in the Battle of Midway the laurels were claimed by B-17s of the Army Air Corps. Again this was accepted by the press and proclaimed in such headlines as “Army Fliers Blasted Two Fleets off Midway.” This was greatly resented in the Navy, but this mythical account of the Midway battle persisted until the end of the war.

    The truth was that the Fortresses based on Midway had persistently and bravely attacked enemy shipping during the battle, but probably without scoring even one bomb hit. In fact, as the official historian Samuel Morison notes in the “History of US Naval Operations of World War II”there is no evidence that any Japanese aircraft-carrier was hit by a B-17 during the entire course of the Pacific War. At Midway Hiryu – one of the crippled and burning Japanese carriers – was strafed by a B-17 and one of her AA guns was damaged. This was probably the only damage inflicted by B-17s on any enemy ship during the great battle.

    Though even that story leaves out that the disorder in the Japanese fleet from all the maneuvering out of the way of bombs left them scattered and disorganized and contributed to their failure to have the right aircraft with the right munitions in the right places at the right times… AND made them easier targets for the dive bombers that eventually sank them. But nobody would ever have thought of it as a strategy. To waste a flight of torpedo bombers, then have B-17s do nothing but harass, as a ‘set up’? The Admirals had no idea what was going to happen next, and that left them uncoordinated and scattered.

    But, back at China: They will have less trouble with our ‘unpredictability’, I fear, as we are becoming more ‘centrally planned’ and ‘regulated’ into uniformity and conformity…

  16. E.M.Smith says:

    @Nick:

    It’s helpful to proceed from the macro to the micro; it’s hard to go from the micro to the macro and get it right.

    China has buckets of money. That means The Central Committee can do whatever it wants to ‘stabilize’ whatever it likes. This means no contagion and not ultimate collapse as they have the resources to prevent it. Yes, some individual managers will lose jobs and some individual investors will get cleaned out; but no, it will not turn into a western style collapse. The Central Committee will see to that.

    So the linkages and loans and leverage just tell you which Party Lackey will get the Sack(ey) ;-) and what well connected Rising Son will take over what property. All because China, writ large, has the cash and will to do it.

    The profit margins are so large in China, and the growth so fast, that a ‘recession’ would be helpful in many ways. So they slow from 12% y/y to 8%? So what. They are still having explosive economic growth.

    IFF some over leveraged Chinese Chemical Company “goes bust”, it will be absorbed by Dear Leaders Cousin’s larger Chemical Company and keep on running. No big. (In many ways, business as usual.) You can’t think of China as “America lite” with independent businesses that are in real competition and it’s “win or die”. China is a matrix of family connections and political favors… who have deep pockets full of cash. And that makes all the difference in the world….

  17. P.G. Sharrow says:

    Central command always dies of it’s own weight. Every strong central government always crushes the society that spawned it. First boom and shinny spurt forward and then the crushing weight of bureaucratic control.
    The bubble is nearly over. As the western world gets an economic flu the Chinese will get economic pneumonia as the bureaucrats will try to maintain the great leap forward to become the great super power that they think they deserve.
    30 years ago the Soviet Union was the darling of the world that would replace the west as the leader of the world. To move from the destruction of WWII to first world status by a command economy is doable for a short while, but then collapse from the weight of the control.
    China started from a low level with only a huge amount of cheap labor and a great deal of help from the western world to counter the Soviet Union. They are at present attempting to artificially maintain that cheap labor basis in spite of their poor efficiency of manpower,energy and materials. This can not last very long and will result in social unrest that will require stronger and stronger bureaucratic control. The great leap forward is the result of bureaucrats “looking” the other way and ignoring control for results and bribes. This will,must end. This kind of governance is not the Chinese way and will end soon. Strong central control is the Chinese way. I have faith in the Chinese Bureaucratic tradition. pg

  18. George says:

    30 years ago the Soviet Union was the darling of the world that would replace the west as the leader of the world.

    I think you mean 50 years ago. 30 years ago we were starting to see the rot setting in. 30 years ago was about the time the workers in the shipyards of Gdansk Poland started to rise up and the Warsaw Pact fell apart.

  19. adolfogiurfa says:

    The country with more values will survive…That´s the rule of nature.
    When romans became too liberal…..the rest of the story is well known.

  20. R. de Haan says:

    It might not be an Asian Century after all
    http://www.atimes.com/atimes/China/MK22Ad01.html

  21. R. de Haan says:

    I always wondered what idiots were going to buy the remaining apartments.

    The entire Chinese economy is a bubble.
    http://www.zerohedge.com/news/guest-post-reasons-chinas-imminent-bust

  22. R. de Haan says:

    The next escalation however comes from Syria as rumors about a no fly zone have gone viral.
    http://www.zerohedge.com/news/aircraft-carrier-cvn-77-parks-next-door-syria-just-us-urges-americans-leave-country-immediately

    I wonder if Syria will keep it’s promise to send every available missile into Israeli territory and I wonder what China will undertake if the upcoming escalation involves Iran jeopardizing China investments and oil supplies.

  23. R. de Haan says:

    The Russians are more clear about their intentions:

    Medvedev takes aim at US missile shield, targeting also Israel’s missile defenses
    DEBKAfile Exclusive Report November 23, 2011, 7:37 PM (GMT+02:00) Tags: Dmitry Medvedev US missile shield Israel Iran nuclear IRGC

    Russian President Dmitry Medvedev
    After deploying three warships in Syrian waters, Moscow continues to beat war drums against the United States followed closely by Tehran. Wednesday, Nov. 23, Russian President Dmitry Medvedev told state television: “I have ordered the armed forces to develop measures to ensure if necessary that we can destroy the command and control systems” of the planned US missile-defense system in Europe. These measures are appropriate, effective and low-cost.”
    Iranian Supreme Leader’s top advisor for military affairs Major General Yahya Rahim Safavi came next. He said: “The Iranian Revolutionary Guards controls the identity and destination of every US warship which intends to pass through the Strait of Hormuz.”
    DEBKAfile’s military sources report that the US missile shield’s command and control systems which the Russian president spoke of destroying are linked directly to Israel’s missile defense network against Iranian, Syria and Hizballah missiles and the X-Band radar station located in the southern Israeli Negev.
    Medvedev’s threat to American “command and control systems” was therefore comprehensive. It referred not just to the US anti-missile shield facilities planned for Europe, but also to preparing measures for use (“if necessary”) – in the course of a possible American or Israeli attack on Iran or Syria – for striking the US missile defense systems in Europe before they can intercept Iranian missiles.
    Knocking out the European shield would leave Israel completely exposed to Iranian missile attack.
    In a very few terse words, the Russian president has made it clear that the Kremlin will not allow Iran and its Middle East allies be prevented from missile retaliation in the event of war. That threat also explains why at least two of the three Russian naval vessels moved into Syrian territorial waters last week were equipped for surveillance and electronic warfare, exactly what is needed for a Russian operation to destroy US missile shield command and control centers near the Syrian border, such as the one stationed in Turkey.
    In another part of his announcement, President Medvedev also threatened to opt out of the new START arms control deal with the United States and halt other arms control talks if the US proceeds with the missile shield without meeting Russia’s demand for it to be managed jointly, which NATO has rejected.
    The Iranian General Savavi’s assertion of the IRGC’s exclusive control of the Strait of Hormuz was in direct response to the crossing of two US carriers, the USS Stennis and USS Bush, through the strait to take up position opposite the Iranian coast. This was reported exclusively by DEBKAfile Monday, Nov. 21.

  24. R. de Haan says:

    it certainly puts the Russian news reader flipping the finger to Obama into the right perspective.

    I think the the Europeans are going to be sorry for scrapping their cold war hard ware over the past few years.

  25. George says:

    “DEBKAfile Exclusive ”

    Means that it is false. More accurately, there is likely a sprinkling of some truth in the falsehoods. Likely misleading:

    DEBKAfile’s military sources report that the US missile shield’s command and control systems which the Russian president spoke of destroying are linked directly to Israel’s missile defense network against Iranian, Syria and Hizballah missiles and the X-Band radar station located in the southern Israeli Negev.

    Goes on to imply that a strike on the European command and control center would somehow cripple an Israeli response to missiles heading for that country. I believe they have the data flow backwards. I do not doubt that a European system would have access to RADAR data from Israel. I highly doubt that Israel would rely on the command and control in Europe for its own defense. It is simply sharing the data, not relying on the C^3 in Europe. It would have its own command and control that is ALSO getting a feed of the data.

  26. Pascvaks says:

    It doesn’t take much to start a war. People are really very nieve about it all. Most think it comes after a bunch of fools in a couple countries elect some bozos to be their Super Poo-Baa, or Grand Marshall, or Commadante-In-Chief (for 30% of the Legal Population and all the illegals), or Der Lil’ Ol’ Leader; and then one of them “accidentaly” crosses some imaginary line in the sand, like Poland, or Pearl Harbor, or even assinates some Archduke or something accidentaly on purpose. No, it’s much easier than that. It all starts when the idiots start talking about things they have no idea about. It seems the idiots are unbuttoning their lips. Maybe a good time to invest in a brand new shovel.

  27. adolfogiurfa says:

    @Pascvaks: Perhaps some “Illuminati” are thinking .Believe me, they think sometimes, too…and whensoever they think…we are in trouble. :-)

  28. Pascvaks says:

    @adolfogiurfa
    ;-)
    True! (The big problem folks have with remembering is that people just love to forget the bad and inflate the good; in a few years, after a wedding and Lil’ Bambino or two, it’s all History; and of course once some PhD’s gets hold of the “facts” it really gets very complicated and intellectual. Little wonder these accidents keep happening.)

  29. George says:

    People tend to latch on to whatever validates their own conclusion or matches the conclusion of their desired cultural affinity group. So if you romanticize “Occupy”, then you are likely to adopt their positions on things without really thinking those positions through because your real goal is to identify with them and be seen by others as being “one of them”.

  30. R. de Haan says:

    I rather look at the facts:

    1. US citizens in Syria have been called to leave the country immediately
    2. There is the intention to establish a No Fly Zone over Syrian Territory
    3. This is an act of war and it certainly will be regarded as an acto of war by Syria
    4. Assad promised to shower Tel Aviv with missiles should NATO interfere
    5. Russia’s Medvedev has warned the US not to get involved in Syria
    6. US and Russian Navy ships have accumulated off Syria’s coast

    I take Medvedev very serious based on the lessons learned when we supported Georgia in 2008.

    Click to access Iskander%2017.11.pdf

    I think Medvedev just has drawn a line in the sand telling us to back away from Syria.

  31. George says:

    2. There is the intention to establish a No Fly Zone over Syrian Territory

    I know of no such intention. One political candidate mentioned something about it being a good idea, but that’s all I have heard on the subject.

    If anyone were to establish a no fly zone, it would be Turkey.

  32. R. de Haan says:

    A No Fly Zone over Syria of course would be an initiative from the Arab Countries and Turkey, however with logistical support of the USA and NATO
    (Turkey is NATO).

    Just read the information from Zero Hedge where this is all spelled out.
    They referred to Kuwaiti source.

    Also have a close read at Medvedev’s speech from yesterday which was on national television.

    Here is the full caption from his own website
    http://eng.kremlin.ru/transcripts

    “First, I am instructing the Defense Ministry to immediately put the missile attack early warning radar station in Kaliningrad on combat alert. Second, protective cover of Russia’s strategic nuclear weapons, will be reinforced as a priority measure under the programme to develop out air and space defenses. Third, the new strategic ballistic missiles commissioned by the Strategic Missile Forces and the Navy will be equipped with advanced missile defense penetration systems and new highly-effective warheads. Fourth, I have instructed the Armed Forces to draw up measures for disabling missile defense system data and guidance systems if need be… Fifth, if the above measures prove insufficient, the Russian Federation will deploy modern offensive weapon systems in the west and south of the country, ensuring our ability to take out any part of the US missile defense system, in Europe. One step in this process will be to deploy Iskander missiles in Kaliningrad Region”

    Also see: http://www.zerohedge.com/news/russia-retaliates-against-us-puts-radar-station-combat-alert-prepares-take-out-european-missile

    Here is the US Embassy link calling for Americans to leave Syria ASAP.
    http://damascus.usembassy.gov/service/information-for-travelers-and-residents/message-for-us-citizens/significant-decrease-in-the-number-of-commercial-flights-from-syria.html

  33. adolfogiurfa says:

    If there is no money you can´t go to the party!

  34. Pascvaks says:

    Medvedev’s geopolitics and threats are all “For Internal Consumption”, the PuppetMaster in Russia is Good Ol’ MasterSpy (P.U.) Putin. If he tells Medvedev to bark or roll over, Medvedev barks and rolls over, and he won’t stop until he hears his master’s voice.

    Russians are indeed paranoid about everything, especially the closer any everything gets to Russia. But they are not worried about their neighbors to the West, it’s the Big Guy in the East that keeps them awake all night in terror.

  35. Pascvaks says:

    PS: A Russian who’s afraid of you is the nicest guy you’d ever want to meet; he’ll buy you drinks all night. A Russian who’s not afraid of you is the Biggest Buffoon & Loudest Liar & most Intimidating Ingrate you’d ever want to meet; he wants you to buy him drinks all night. (But then, that’s true of everyone in the West, isn’t it?;-)

  36. R. de Haan says:

    @Pascvaks (12:54:37) :
    “Medvedev’s geopolitics and threats are all “For Internal Consumption”, the PuppetMaster in Russia is Good Ol’ MasterSpy (P.U.) Putin. If he tells Medvedev to bark or roll over, Medvedev barks and rolls over, and he won’t stop until he hears his master’s voice”.

    Yes, Putin, the ruler who beats women, a major character flaw if you ask me.
    I think Putin is a huge threat to the West and we’re going to hear more about him soon.

  37. adolfogiurfa says:

    @R. de Haan Do yoy know Putin wants reestablish Monarchy in Russia? I predict this is the following “turn of the screw” in human history, after the one during the French Revolution.

  38. R. de Haan says:

    Yes Adolfo, Putin has aspirations to become the new Tzar.

    FROM A TZAR IS BORN
    http://newhumanist.org.uk/1736/a-tsar-is-born

    “Putin’s influence has barely been diminished by his replacement. Indeed, he more or less handpicked him, just as the ancient Tsars and Empresses used to appoint theirs. His successor, Dmitry Medvedev, already appears to be advancing Putin’s courting of wealth and glamour. And this, too, echoes the aspirations of Catherine, who sought to emulate and even to outclass the sumptuous luxury of the European courts and major cities.
    Like Catherine, Putin is also a dogged expansionist. “Having just grabbed a piece of the Arctic the size of Western Europe,” Winik comments, “the Russian military has announced ambitious plans to establish a permanent presence in the Mediterranean for the first time since the end of the Cold War.”
    Russian bomber patrols have recently been made over the Atlantic, Pacific and Arctic oceans and come close to the borders of Nato airspace. They’ve even approached the Bay of Biscay off France and Spain to test-launch missiles, as well as setting their sights on the eastern Mediterranean. Only last month, in one of his last speeches as president, Putin warned: “It’s clear that a new arms race is unfolding in the world.”

    This was written in 2008.

    All that has happened from that time on confirms what what Sally Fieldman has written about Putin.

    Thanks to the publication of his BNP files we know more about his character.
    http://articles.businessinsider.com/2011-11-02/europe/30349262_1_vladimir-putin-spy-agency-bnd

  39. E.M.Smith says:

    @Pascvaks:

    I guess that’s what’s wrong with me (my lack of ‘appropriate social cueing for things like making bullies like me ;-) as, if I’m afraid of someone, I would never ever buy them a drink. I would give them one clear assessment top to bottom in about a 2 second scan then either adopt a defensive posture (legs and arms ‘near’ a defense capable position while looking ‘at ease’) and keep an eye on them (if I figure I can take them in a pinch – and just need to be ready for the ‘kill shot’ if demanded). Or, if it’s clear I can’t “take them”, head for the door as rapidly and smoothly as possible while not drawing undo attention.

    If I’m not afraid of someone and they seem like a nice guy, I’ll buy them a drink and ask them what they like to do with their life…

    Clearly that confuses the expectations of your hypothetical “westerners”… as I’ve got things backwards ;-)

    @R. de Haan:

    Per Russia: I don’t think it’s internal consumption only and bluff. I think it’s Russian Political Chess on a large scale and a ‘play’ to reestablish the reach of the FSU sphere of influence. I’m also pretty sure they would be willing to establish a “northern middle east” Russian Protectorate of all that oil and all those oil and gas transit points, if given the opportunity / excuse.

    That our leaders are completely clueless on this and think of Russia as “used to be an issue, now an EU Wanna Be In Waiting” if only we talk to them nice (if we have to talk to them…) just says we are lousy at The Game.

    Unfortunately, things are shaping up rather like the Armageddon description of biblical fame. War in Israel & The Levant with Gog and Magog joining in along with New Rome of the many headed form. I like to think it’s just the geographical imperative of warfare reflected 2000 years later; I’d hate to think it was actually prophetic.

    Per Syria:

    I heard the best description of a Syria No Fly Zone stupidity on Fox Business (IIRC) where it was pointed out they have some several thousand tanks and are not using air to oppress their people. Roughly “What it would take is a no-drive zone. No-Fly will accomplish nothing.”

    So we’re going to enter a ‘posturing war’ with Russia, the end game of which is likely disaster of one sort or another. Oh Boy…. /sarcoff>

    Oh, and the Tatiana video has been pulled. I’d have loved to have seen it…

    Back on China:

    Yeah, it’s going to be a domestic mess. But as long as they hold $Trillions of US and Euro debt, they can fund a lot of mess… Only the ‘little unconnected people’ will be hurt.

    Oh, and the building that fell over… Looks those pilings are a mite short ;-)

  40. adolfogiurfa says:

    @E.M-: You are right. Read the following:
    http://mat-rodina.blogspot.com/

  41. Pingback: Orthodox Greater Russia « Musings from the Chiefio

  42. George says:

    The front fell off:

    http://www.msnbc.msn.com/id/45426215/ns/travel-news/#.Ts6jlfJjFnA

    I have a feeling we will be seeing a lot more of these sorts of stories going forward.

    Oh, and the comment about the front falling off is a reference to a hilarious youtube video one should look up and watch sometime.

  43. H.R. says:

    @George
    I saw my daughter-in-law today (one of the better Thanksgiving meals in recent memory) and verified that her mom bought her apartment about 12 years ago with a bank loan, BUT she said you were essentially correct: most property is bought with cash. Why she should be treated differently, though she is a pensioner, and get a mortgage wasn’t clear even to my daughter-in-law. I’m sure she had favorable connections. Also, a 30-yer mortgage for a personal property probably has never ever been written in China.

    I asked her about a property bubble and she said she has discussed that with her folks. Where the folks are, housing supply is still way behind in demand. Other areas are glutted and properties are worth less than what was paid. Also, having bought 12 years ago her mom and dad aren’t foreseeng anything worse than break-even or a pitifully small profit if they sold after a ‘pop’.

    Inflation hasn’t become a problem yet but is noticable and discussed.

    That’s the Thanksgiving report from “boots-on-the-ground” in China. I wish I could talk to her father as he has a few businesses going and is moderately well connected., but he has no English skills other than the typical greetings, please and thank you, and maybe a where is the bathroom. Ah well.

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